Warning Indicator for China Banking Stress Climbs to Record


1474201405_GettyImages-576526520 copyPhotographer: Johannes Eisele /AFP via Getty Images

  • Credit-to-GDP ‘gap’ exceeds all other nations in BIS study
  • China’s reading is its highest in data starting in 1995

A warning indicator for banking stress rose to a record in China in the first quarter, underscoring risks to the nation and the world from a rapid build-up of Chinese corporate debt.

China’s credit-to-gross domestic product “gap” stood at 30.1 percent, the highest for the nation in data stretching back to 1995, according to the Basel-based Bank for International Settlements. Readings above 10 percent signal elevated risks of banking strains, according to the BIS, which released the latest data on Sunday.

The gap is the difference between the credit-to-GDP ratio and its long-term trend. A blow-out in the number can signal that credit growth is excessive and a financial bust may be looming…

Warning Indicator for China Banking Stress Climbs to Record

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